Regional Daily, Maybank KE (2014-05-26)

Daily 26 May 2014 TOP VIEWS Indonesia Strategy UMW Holdings (UMWH MK) | BUY Thailand Banking | NEUTRAL Indonesia Strategy Another decade of sunshine Strategy report A smooth leadership transition, followed by structural reforms will lead to another decade of solid growth and potential sovereign rating upgrade. New government will focus on infrastructure, healthcare, and raising the living standards for the general population. Structural reforms, including reduction in fuel subsidies, are likely to happen sooner rather than later. We target JCI to reach 6000 at YE15, implying a rerating to 3.0x PB and 16x PE 2015 on the back of 16% aggregate earnings growth. OVERWEIGHT mass market consumer, infrastructure, and healthcare sectors. Click here for report » UMW Holdings (UMWH MK) Better results ahead Share Price: MYR10.78 | Target Price: MYR12.44 (+15%) | MCap (USD): 4.3B | ADTV (USD): 4.7M 1Q14 results within our and consensus expectations. Expect stronger quarters ahead with (i) contributions from new jack-up rigs, and (ii) seasonally stronger car sales. Pending analyst briefing today, our forecasts are unchanged. Maintain BUY with unchanged SOP-based TP of MYR12.44. Click here for report » Thailand Banking Expect weak credit growth in 2Q14 Sector update Loan demand remained subdued in April due to weak business and consumer confidence. Banks also tightened credit approvals to control asset quality. Running loan growth in 4M14 was 7.9% YoY, but we expect growth to deteriorate following the military coup, thus coming to our 2014 base line case of 5.9%YoY. We prefer large banks with high business loan exposure and a diversified revenue structure given uncertainty in the political resolution. Top picks are KTB and KBANK. Click here for report » COMPANY NOTES Sunac China (1918 HK) | BUY Bumi Armada (BAB MK) | BUY GT Capital (GTCAP PM) | HOLD Sunac China (1918 HK) Sizeable deal; Ambitious vision Share Price: HKD3.52 | Target Price: HKD5.92(+68%) | MCap (USD): 1.5B | ADTV (USD): 7M Sunac announced acquisition of 24.31% stake in Greentown (same stake as Wharf) for HKD6.3b. FY14 net debt/total equity guidance of <=90% unchanged. Though we see the acquisition price as not cheap, market concerns on Sunac�s cashflows should be largely in the price and we see potential for further stake increase and synergie. Click here for report » Bumi Armada (BAB MK) Results were below expectations Share Price: MYR3.90 | Target Price: MYR4.55 (+17%) | MCap (USD): 3.6B | ADTV (USD): 2.6M 1Q14 NP was only 14%/13% of ours/consensus initial forecasts; proposed 1-for-2 rights and 1-for-2 bonus issues. Cut FY14/15 net earnings by 11%/ 12%. SOP-TP lowered to MYR4.55 (-9%) accordingly. BUY. (FULL REPORT TO BE OUT SOON) GT Capital (GTCAP PM) Recovery likely from weak 1Q14 Share Price: PHP855.00 | Target Price: PHP875.00(+2%) | MCap (USD): 3.4B | ADTV (USD): 4M 1Q14 earnings down 56% on lower contributions from Metrobank and Global Business Power. Maintain FY14E net income as auto and property businesses expected to stay strong while performance of financial and power units improve. Maintain HOLD with TP adjusted to PHP875, equivalent to 15.0x 2014F PER. Upside potential remains limited. (FULL REPORT TO BE OUT SOON) ECONOMICS Singapore CPI, Apr �14 Singapore CPI, Apr �14 Higher on transport and food costs Economics Inflation rate in Apr 2014 rose +2.5% YoY (Mar 2014: +1.2% YoY), mainly on transport and food prices. Core inflation rate (CPI ex-accommodation and private road transport) also edged up +2.3% YoY from +2.0% YoY in Mar 2014. Domestic cost pressures will remain as main drivers for Singapore�s inflation this year. No change in our +2.3% CPI forecast for 2014 (2014 YTD: +1.4%; 2013: +2.4%). Click here for report » FLASH NOTE Vard Holdings (VARD SP) | BUY Vard Holdings (VARD SP) Strong order win momentum Share Price: SGD1.01 | Target Price: SGD1.27(+26%) | MCap (USD): 947M | ADTV (USD): 3M Secured two new contracts worth NOK1.3b, of which one worth more than NOK1b is for Island Offshore. YTD order win of NOK6.8b forms 53% of our FY14E forecast. Beneficiary of an OSV upcycle; reiterate BUY with SGD1.27 TP based on 1.4x FY15E P/BV. Click here for report »